Five Star Tool Essay

625 Words Mar 5th, 2016 3 Pages
Five star tools is a small family-owned tool that manufactures diamond coated cutting tools used by jewelers. Recently, the company has begun to experience growth which has caused constraint in one of the three production process. The president of the company, Maxfield Turner and vice-president of marketing Betty Spence, recently sat down to discuss the possible solutions to eliminate this constraint.
Five star tools have three major production processes: first, the steel blanks are cut to size, second the blanks are sent to a chemical bath that prepares the coating process. Lastly, the major process where constraint is shown, the blank are coated with diamond chips in a proprietary process, simultaneously coats and sharpens the blade
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The inspection station will not need additional staff, because the employees who normally work in the chemical bath area will be able to work in the inspection station as well. This according to management will free up 240 hours in coating and sharpening time. Incremental profits per year associated with adding this new inspection station will be 240 hours multiply by $850 which is average contribution margin per hour will equal $204,000 increment profit.
Lastly, the final step of Goldratt’s theory is identifying a new binding constraint, because identifying new constraint should be a task that each company does on a normal basis, once Five star’s tool solve this bottleneck constraint issue, a new one will be identify and solved to ensure the effortlessness of the operation.
Five start tools company has the same issues that most manufacturing company have, but the fact that the president recognize the problem and is actively trying to find a solution to the constraint will enable the company to avoid bottleneck of constraint. The company will also profit greatly because it not only identifying the constraint but putting it efforts into the product that will gain the most profits with little to no cost in employee’s salaries and other variable and fixed costs. Model C210 Model D400
Selling Price $500 $850

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